Question

You borrow $200 from a friend. You repay the loan in 2 weeks and agree to pay $8 for interest. What is the annual percentage rate? Round your answer to the nearest tenth of a percent

Answer 1

It is given that Borrowed money= is $200, Interest= is $8, and Time =2 weeks.

We need to find the annual percentage rate.

`2\text{ we}eks=14\text{ days}`
`1\text{ year=365 days}`
`\text{Time =}(14)/(365)\text{ days}`

Recall the formula for the simple interest formula

`Simple\text{ interest}=P*(r)/(100)* t`

Substitute P=$200, simple interest=$8, and t=14/365, we get

`8=200*(r)/(100)*(14)/(365)`

`8=0.767* r`

`(8)/(0.767)=r`

`r=10.43\text{ \%}`

Hence the annual interest is 10.4 %.